Federal Supreme Court follows Interflora in keyword case

The German Federal Supreme Court has ruled once again on the issue of whether purchasers of keywords can be held liable for trademark infringement, and issued a decision which appears - only prima facie - to be a change in jurisprudence (Case I ZR 53/12).

The claimant, Fleurop, is the proprietor of the German trademark FLEUROP, which is used nationwide for flower delivery services. The distribution system of the claimant allows its clients to order flowers at the shop of one partner florist and have them delivered somewhere else through another partner florist. The defendant, Blumenbutler, is the proprietor of the trademark BLUMENBUTLER (‘flower butler’) and is also in the flower delivery business. It purchased the term ‘Fleurop’ as a keyword in Google’s AdWord programme. When an internet user searched for the ‘Fleurop’ in Google’s search engine, sponsored links (advertisements) leading to the defendant’s flower delivery service were displayed. Fleurop alleged infringement of its trademark rights under Section 14(2) German Trademark Act.

Based on its earlier case law (eg, decision of December 13 2012 in MOST-Pralinen (I ZR 217/10) and decision of January 13 2011 in Bananabay II (I ZR125/07)), the Federal Supreme Court confirmed that, in principle, there is no infringement of the function of a trademark as an indication of origin if the advertisement generated by the AdWord search:

• is visually separated from the natural search results; and
• does not make any reference either to the trademark owner or to the products marketed under that trademark.  

Applying the two-step test set forth by the Court of Justice of the European Union (ECJ) in Interflora (C-323/09), the Federal Supreme Court first assessed whether a reasonably well-informed and reasonably observant internet user would be aware, on the basis of his/her general knowledge of the market, that Blumenbutler’s flower delivery service is not part of the Fleurop network but is, on the contrary, in competition with it. Since the court did not conclude that there was such general knowledge among internet users, it was decisive, according to the second step of the test, whether the advertisement enabled users to tell that Blumenbutler’s service did not belong to the Fleurop network.

The court held that, even though there was no infringement in principle, due to the particular distribution system of the claimant, the circles concerned might assume that Blumenbutler was a partner florist. As the advertisement did not include any information clarifying the absence of a commercial link between Fleurop and Blumenbutler, the defendant was liable for trademark infringement.  

The decision is the latest in a series of cases in which the Federal Supreme Court has had to rule on the issue of the liability of purchasers of keywords for trademark infringement. This decision - concluding that infringement had occurred - may appear surprising at first glance, in view of the fact that the Supreme Court has so far consistently ruled that there was no trademark infringement in such cases, because keyword advertising does not infringe the origin function of a trademark if the advertisement is visually separated from the natural search results and does not make any reference either to the trademark owner or the products marketed under that trademark.

With this decision, the Federal Supreme Court followed the decision of the High Court of England and Wales in Interflora v Marks and Spencer ([2013] EWHC 1291 [Ch]), incorporating the guidelines laid down by the ECJ in Interflora (C-323/09); the facts of the German Fleurop case corresponded in all essential aspects to the English Interflora case.

However, the present decision does not appear to constitute a new approach to keyword advertising, but rather fits into well-established case law: the court itself emphasised that, in principle, keyword advertising does not amount to trademark infringement, and repeatedly highlighted the exceptional and specific nature of this case.

The exception highlighted in this decision could apply in cases involving franchise systems or networks distributing specific goods or services under a trademark through partner stores and where the franchisees or partners do not operate under the same company name. This would exclude many well-known same-name franchise systems, but might apply to specific distribution systems similar to the Fleurop system. It is not thought that there are any such cases currently pending before the Supreme Court.

Anna Mattes, Bardehle Pagenberg, Munich